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dc.contributor.authorPolachek, Solomon W.en_US
dc.contributor.authorSeiglie, Carlosen_US
dc.date.accessioned2006-12-13en_US
dc.date.accessioned2010-07-07T09:51:46Z-
dc.date.available2010-07-07T09:51:46Z-
dc.date.issued2006en_US
dc.identifier.urihttp://hdl.handle.net/10419/33820-
dc.description.abstractAt least since 1750 when Baron de Montesquieu declared peace is the natural effect of trade, a number of economists and political scientists espoused the notion that trade among nations leads to peace. Employing resources wisely to produce one commodity rather than employing them inefficiently to produce another is the foundation for comparative advantage. Specialization based on comparative advantage leads to gains from trade. If political conflict leads to a diminution of trade, then at least a portion of the costs of conflict can be measured by a nation's lost gains from trade. The greater two nations' gain from trade the more costly is bilateral (dyadic) conflict. This notion forms the basis of Baron de Montesquieu's assertion regarding dyadic dispute. This paper develops an analytical framework showing that higher gains from trade between two trading partners (dyads) lowers the level of conflict between them. It describes data necessary to test this hypothesis, and it outlines current developments and extensions taking place in the resulting trade-conflict literature. Cross-sectional evidence using various data on political interactions confirms that trading nations cooperate more and fight less. A doubling of trade leads to a 20% diminution of belligerence. This result is robust under various specifications, and it is upheld when adjusting for causality using cross-section and time-series techniques. Further, the impact of trade is strengthened when bilateral import demand elasticities are incorporated to better measure gains from trade. Because democratic dyads trade more than non-democratic dyads, democracies cooperate with each other relatively more, thereby explaining the democratic peace that democracies rarely fight each other. The paper then goes on to examine further extensions of the trade-conflict model regarding specific commodity trade, foreign direct investment, tariffs, foreign aid, country contiguity, and multilateral interactions.en_US
dc.language.isoengen_US
dc.publisherIZA Bonnen_US
dc.relation.ispartofseriesIZA Discussion Papers 2170en_US
dc.subject.jelF01en_US
dc.subject.jelF51en_US
dc.subject.jelF59en_US
dc.subject.jelD74en_US
dc.subject.ddc330en_US
dc.subject.keywordtradeen_US
dc.subject.keywordconflicten_US
dc.subject.keywordcooperationen_US
dc.subject.keywordinterdependenceen_US
dc.subject.keywordgains from tradeen_US
dc.subject.keyworddyadic disputeen_US
dc.subject.keyworddemocratic peaceen_US
dc.subject.keyworddemocracyen_US
dc.subject.stwAußenwirtschaften_US
dc.subject.stwPolitischer Konflikten_US
dc.subject.stwDemokratisierungen_US
dc.titleTrade, peace and democracy: an analysis of dyadic disputeen_US
dc.typeWorking Paperen_US
dc.identifier.ppn513828613en_US
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungen-
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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